Money launderer amnesty will discourage honest taxpayers: FBCCI
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has come out against the budget proposal offering money launderers the option to legalize undeclared offshore assets, saying it would actually encourage capital flight and discourage honest taxpayers.
“This facility will encourage people to launder money overseas,” FBCCI chairman Md Jashim Uddin told a press conference in Dhaka on Saturday, where the top trade body of the country reacted to the draft budget for the financial year 2022-23.
Moreover, honest taxpayers will consider smuggling money out of the country as the most effective means for paying taxes when they see that black money laundering is possible with only 7% tax, while you have to pay taxes ranging from 22 to 27% inside the country. country, he continues.
The proposed FY23 budget presented to parliament by Finance Minister AHM Mustafa Kamal on Thursday offers the possibility of legalizing real estate and movable property purchased abroad with money diverted from Bangladesh by paying taxes at 15% and 10%, respectively, if they are not. reported. And if the laundered money is brought back, the tax rate is only 7%.
Top trade body thanked PM for her efforts in formulating business- and investment-friendly budget, but raised concerns over several initiatives, in particular doubling of withholding tax on exports , the maintenance of withholding tax on income (AIT) and withholding tax. , the imposition of VAT and customs duties on imports of certain goods, including laptop computers, the doubling of withholding tax on interest on bank deposits and the strengthening of the authority of tax.
The federation also expressed frustration at the non-increase in the non-taxable income cap for individual taxpayers and called for raising it to Tk4 lakh from the existing Tk3 lakh.
Opposing the imposition of VAT on imports of laptops, the FBCCI said: “If good quality laptops were produced in the country, we ourselves would have proposed to impose an additional VAT on imports in the interests of protecting local industry. But, we did not make such a proposal. So who demanded it?
Similarly, the trade body expressed dissatisfaction with the imposition of VAT on coronavirus protective equipment as the Covid-19 pandemic is not yet over.
The increase in withholding tax on business interest income from bank deposits will discourage people from putting their money in banks, which will lead to a further increase in undisclosed assets, warned Jashim Uddin.
The FBCCI also opposed the BNR’s decision to entrust the mission of monitoring electronic fiscal devices (EFD) to a third party and to allocate 1% of VAT receipts to it for this work. Instead, companies using EFDs should be offered a 1% VAT exemption, the trade body has suggested.
In addition, the federation called for finding funding from abroad rather than from the local banking system to fill the budget gap. Overreliance by the government on bank loans could hamper the flow of credit to the private sector, he observed.
On the show, Rizwan Rahman, chairman of the Dhaka Chamber of Commerce and Industry (DCCI), expressed concern that the increased power of NBR officials would increase harassment of traders.
Speakers at the press conference also called for simplifying the tax system, raising the VAT rate at wholesale level to 0.5% and not limiting it to a few products, and relaxing the obligation to deposit 20% of the disputed amount in the event of an appeal.
FBCCI said the budget would be more business-friendly if its proposals were accepted.
Among others, Mohammed Hatem, Executive Chairman of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Saiful Islam, President of Metropolitan Chamber of Commerce and Industry (MCCI), Mostafa Azad Chowdhury Babu, Senior Vice President of FBCCI , and Fazlul, vice-president of the Bangladesh Textile Mills Association (BTMA). Hoque attended the press conference.
Double the tax at source to affect exports
The FBCCI believes that increasing the withholding tax on exports from 0.5% to 1% will have a negative impact on the country’s export earnings.
Mentioning that countries around the world are going through an economic downturn, FBCCI President Jashim said that it was by no means logical to increase the withholding tax on exports by 100%.
“The 0.5% withholding tax is basically levied on the FOB value (freight on board or export price). This tax rate is 20% to 25% on the actual income. Thus, if the tax rate doubles, the export sector will lose its competitiveness, but the country badly needs foreign currency in these times,” he explained.